Pursue builder via lawyer or not ?

[ArranP]

The builder to date, has received 1.6 million baht in staged payments, but has completed only 1.2 million baht worth of work.

He now tells me his company has negative equity and he needs another 100k to continue the build. The contractual price is 2.3 million baht complete.

Is it worth paying a lawyer to pursue him or would it be cheaper to use the money instead on finishing the house ?

Edited September 28, 2013 by ArranP

[RKASA]

You will be 1.7 into a 2.3 project - is he going to complete it on budget? If you think so then move forward and get work done. Otherwise you might spend years looking at 1.6m that does nothing for you. If you call in a lawyer your house may look more like one of the many police stations around Thailand today. Half done.

A hold back of 20 or 25% is where I would get concerned and start to make a finer line in the sand. Make sure they know that finals are conditional after that, but work it out. He has his bills to pay too - even if it is not your problem it is effecting your investment and time line. If he fails you will still have the same problem and enough remaining money to buy lawyers with. Going logger heads on him will not likely improve things. Not yet anyway.

[MYKTHEMIN]

Forget him and get someone else to finish it, do not waste your time with a lawyer you will get nowhere.

[Gsxrnz]

Continue with him until he goes bust to try and get the maximum return/leverage from your spend to date. DO NOT give him any cash for materials. Purchase the materials directly yourself (with his advice). That way YOU retain ownership of the items and you know where the money went. Negotiate with him to pay employee wages (via him if necessary), but make sure the workers know that you are giving him cash to pay their wages so he can't re-route the money.

In doing the above you maintain a modicum of control and you should ensure that you get 100k of value for the 100k additional that he wants from you. You may even be able to leverage more work out of him to recover some prior expenditure. DON'T just give him 100k - he will pay other bills or fund other debts and you'll get no value.

There seems little doubt that he will go belly up - your mission is to leverage as much future work from him as you can for the money you've already paid. You are going to lose some of your money. He is insolvent, so consulting a lawyer will just cost you legal fees with no hope of any recovery, you can't get blood from a stone. Don't make it worse by throwing another probably 100K at a lawyer with virtually zero chance of a result.

HINT: "Progress payments" should NOT be paid in advance. They are payments for progress achieved. If a builder complains of insufficient cashflow to purchase materials and pay wages until you pay him, then he has no equity anyway and should not be used. At best, you should purchase materials yourself etc as described above to make sure you get value for money. Throwing progress payments in advance at a builder allows them to fund other projects, pay prior debts, buy a new truck, buy the mia-noi a new watch etc. This sort of <deleted> happens in Farangland also, Thailand is not unique in this regard.

Follow good business practice and you shouldn't come unstuck. The golden rule of sound business practice is CYA (cover your arse).

Good luck

[PattayaPhom]

I would ask if he has negative equity now, how will the 100K complete the project. Do yo think this is sufficient, if not, next week he will be asking for another 100K. Lawyers are expensive and really wont get you anywhere in a case like this without a lot of time and money.

[bocceball1]

Lots of good advice here....First off don't hire an attorney.....not going to get you anywhere if the guys going bankrupt anyway (hire an attorney an he WILL go bankrupt or disappear) and for sure he'll stop work AND you'll be out the money for the attorney.

Assess your relationship with him ....is it good? Do you still have some trust in him?

You say you've paid 1.6 million baht so far for 1.2 million baht work......How do you work or figure that out?....(1.1 million baht to finish work? How many sq meters is this place?. ....I've had built a few and the average cost for a high end build for me to get done has been 10,000 baht/sq meter....so I'm guessing your place is around 200-225 sq meters...Reason I say this is Maybe ..MAYBE you're overpaying as it is and would be better and cheaper to go with another contractor.)

Good advice already given is to try and work with him and get as much value out of him as you can. As already stated ...DON'T give him the extra 100,000 outright ...Pay for the materials yourself and keep track of the workers who work each day (Average pay 300-400 baht a day depending on skill).

Last resort....take the loss ...get another builder to finish. Or if your adventurous get the wife's family upcountry to come down and help you finish the project....Not my first choice though

....your in a tight spot.

Good luck

[keeniau96]

Lawyers are a waste of time and money, wil do nothing to get the house done. GSXrnz basically says what is good point-forward action. You disburse the money directly to the material suppliers, subcontractors and workers. Dangle some pie-in-the-sky at the builder to keep him active, after all is said and done is know who and what is needed.

[jimmym40]

Take GSXMZ's advice. I agree totally. He must have been in a similar situation and I know that's the correct way to go. Buy the materials he needs and get as much labor out of him as possible. I also agree, DO NOT hire a lawyer, the builder will probably get a kick-back from the lawyer and the only person that will loose is YOU.

What part of Thailand are you building?

[lockman]

 

Lawyers are a waste of time and money, will do nothing to get the house done. GSXrnz basically says what is good point-forward action. You disburse the money directly to the material suppliers, subcontractors and workers. Dangle some pie-in-the-sky at the builder to keep him active, after all is said and done is know who and what is needed.

Had a friend who hired a lawyer..and he won in court. However lawyer cost 25000B and as person has zero money = he won nothing. Yep he has a judgement..that is worthless.

Do as others have said use his advice, but purchase materials yourself.

I had some problems during my build, had 2 contracts with same builder. His actual problem was he was building govt buildings as well and they weren't paying him. So I paid him final payment on 1 contract with the note added that the other contract would be paid last payment after all finished on both. Reputable builder however and everything completed.